Green new deal provides fresh economic ideas

Britain may look forward to a return to growth, but a better measurement of well-being is necessary for the country’s future

By Larry Elliott / The Guardian, LONDON

The GND was an attempt to fill the vacuum. Its basic premise was simple: rein in the financial sector, invest in those part of the economy such as making homes more energy efficient that would provide jobs for construction workers and reduce carbon dioxide emissions.

There was a brief flurry of interest when the global economy cratered in the winter of 2008 and 2009. Gordon Brown called for a global green new deal, as did the United Nations Environment Programme. However, the interventionist mood soon passed, to be replaced by deficit reduction and austerity.

The GND had its critics on both the left and the right. That was only to be expected because there were many interpretations — from the Marxists to the Austrian school — of what had gone wrong and what needed to be done to put it right. Marxists thought any attempt to repair a broken system was forlorn; social democrats were nervous about the cost; the right disliked meddling with the market and said the GND would end up burdening consumers with higher prices.

In their various ways, these are all valid points. However, the GND was never envisaged as a flawless blueprint. It was intended to stimulate debate about how to make the transition towards a low-carbon economy and as an alternative to austerity. To those involved, the question was not whether it embodied policy perfection but how it stacked up against the alternatives.

The updated 2013 version of the GND has six themes: the need for a green infrastructure program providing jobs with living wages in every constituency in the UK; tackling tax evasion and avoidance; a program of green quantitative easing to ensure that money created by the Bank of England benefits the environment; controls to ensure that the bailed-out banks invest in green projects at low rates of interest; encouragement for pension funds and other institutions to invest in the GND; and buying out the private finance initiative debt using green qualitative easing and diverting some of the huge repayments into investment in tackling climate change.

In one sense, the timing could hardly have been worse for the GND report. The economy is growing again. Memories are short. However, ask the following questions. Do you think a recovery that requires households to get deeper into debt is for real? If it is not, how long before the age-old problems of the UK economy reassert themselves? Are we any closer to grappling with the triple crunch than we were five years ago? If the solution is not a GND then what is it?